Lahore, May 14, 2019 (PPI-OT): Pakistan’s Tax system should be revamped in line with Chinese Taxation model, which is based upon growth instead of the regulatory pressures. It was stated by Shah Faisal Afridi, President Pakistan-China Joint Chamber of Commerce and Industry while presiding over a high level meeting with the executive committee members of PCJCCI. Mr. Ahmed Hasnain Senior Vice President, Mr. Salahuddin Hanif, General Secretary and a number of the executive committee members were present in the meeting. Afridi was of the view that administrative reforms are essential in the tax system and attention should be paid to re-designing of tax recovery system. He also gave a briefing on the proposed tax reforms roadmap based on the Chinese Taxation model.

President PCJCCI said that there was a need to create an optimal balance between a tax regime and the growth of business to create an investment friendly environment along with an effective mechanism for leveraging enough revenue for public service. He told that that China had undergone a splendorous Community development on the bases of its Taxation Reforms and Pakistan can make a paradigm shift to have a business friendly taxation system by following Chinese taxation reforms. China made Taxation central to the economic development agenda and community development goals, he said adding that China had employed Taxes as the principal means to transfer resources from private to public use.

Mr. Ahmed Hassanain, Senior Vice President of PCJCCI, while expressing his views, informed that in Pakistan only 0.3pc of the population is paying income tax, which is one of the lowest ratios in the world. Around 7 million Pakistanis are estimated to be eligible to pay income tax, but practically only less than 0.5 million people pay the tax. He regretted that the prevailing taxation system was a source of harassment and a way of corruption for the business community, which needs to be replaced with better taxation models of the world including the Chinese model that has proved to be the most successful.

Mr. Salahuddin Hanif, General Secretary PCJCCI, giving his inputs on this occasion said, “China, the socialist state has fulfilled the needs of society from cradle to grave. Child care, education, job placement, housing, subsistence, health care and elder care are largely provided and administered through state-owned enterprises”. He told that particularly the reform of value-added tax (VAT) had boosted China’s service sector and developed its position as the “world’s factory. He said that VAT reform was designed to replace business tax in manufacturing sector to protect the tax revenue of local governments. The tax, in China, emerged as a by-product of growth and the government in Pakistan should also concentrate on growth that would automatically increase taxes, he added.

The executive committee members were of the unanimous views that once equity and fairness in the tax system had been demonstrated by the state, enforcement as well as compliance would dramatically improve. They maintained that the increase in direct income tax from those who could afford to pay should pave the way for a significant reduction in reliance on indirect taxation from the poor.